Earnings Season Gets Off To Good Start

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Please enjoy the BigView bullets and market outlook video. The commentary will be available this evening.

 

 

 

Every week we review the big picture of the market's technical condition as seen through the lens of our Big View data charts. The bullets provide a quick summary organized by conditions we see as being risk-on, risk-off, or neutral.  The video analysis dives deeper.

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Summary: Markets remain in a broadly risk-on posture, with new all-time highs in the Nasdaq and S&P, strong sector performance–including surprising strength in both Technology and Utilites–and continues leadership from growth stocks and emerging markets. However, mixed volume, neutral risk gauges and weakening market internals suggest caution as underlying breadth and momentum may be faltering beneath the surface. Because of some of the weakness in the markets, we recommend keeping tighter stops especially for short-term traders.

Risk On

• Markets were slightly up on the week with the exception of the Dow (down -0.16%) putting in new all-time highs in Nasdaq and S&P. We want to see it hold the lows from the last two weeks to maintain risk-on. (+)
• The majority of sectors were positive on the week. Interestingly, Technology and Utilities (typically risk-off) were both up the strongest (related to AI). (+)
• Clean energy was one of the strongest performers on the week. (+)
• Volatility continues to languish at low levels. (+)
• Growth continues to lead value. Both are in bull phases and growth stocks are driving the S&P higher. (+)
• Emerging markets exploded to new 52-week highs, outperforming more established foreign equities, which closed below its 50-Day Moving Average in a weak warning phase. EFA would be good to watch for a potential sell-off in global equities. (+)
• The color charts (moving average of the number of stocks above key moving averages remains positive and strong on long-term readings. (+)
• Bitcoin made another new all-time high, though put in some flagging action on the week. (+)
• Seasonal’s are still strong for July, though they tend to cool off a little in August. (+)

Neutral

• Volume was fairly mixed. (=)
• The color charts (moving average of the number of stocks above key moving averages) on short-to-mid-term readings are neutral. (=)
• Risk gauge backed off to neutral due to strength in utilities from AI demand. (=)
• The 52-week new high new low ratio moved into neutral territory. (=)
• The modern family was neutral with retail and transportation lagging, while semiconductors did lead the market to new highs. (=)
• Aggs moved up a little on the week, putting in a new 3-week high. (=)
• Gold is congesting around its recent highs. (=)
• Rates remained in a trading range as the market is unsure about the economy, global factors, and Powel’s continued tenure at the Fed. (=)

Risk Off

• Market internals are relatively weak diverging from price action with the market hitting new highs, potentially a bit of an early warning. (-)